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The US Equity Market Summed Up In One Stock Chart

The stock below is up 1200% year-to-date. The company in question is insolvent by any and all measures and has a "parent" under great pressure to take whatever gains it can get (as opposed to leave anything for shareholders). The company is exposed to the worst of the worst in the housing market. The smart money (as they are called) is piling in. The company is, of course, Fannie Mae (or Freddie Mac - same discussion). This chart, like none other, reflects the "investment" thesis in America today, as Grenwood's Walter Todd notes, “Either you’re going to make a lot of money or you’re going to lose everything you put into it."

However, as he adds, "I cannot fathom the government allowing someone to profit from these two entities given everything that’s happened, and the pain endured by the government and the taxpayer.”

The consensus in Washington among Democrats and Republicans is that Fannie Mae and Freddie Mac should be dismantled and shareholders wiped out. The Obama administration believes the two should be wound down, the Treasury Department said in a statement.

But why not gamble on the likelihood that against all odds, you can become instantly rich...